Switzerland GDP

In the first quarter, GDP increased 0.5% over the previous quarter in seasonally-adjusted terms. The reading came in above the 0.2% expansion observed in the fourth quarter, but fell short of the 0.6% increase the market had expected. Compared to the same quarter last year, GDP accelerated from a 1.7% increase in Q4 to a 2.0% expansion in Q1.

Q1’s acceleration was driven by a notable improvement in the external sector. Exports of goods and services surged 2.2% in Q1, which was above the 1.0% increase tallied in Q4. Imports swung from a 3.1% expansion in Q4 to a 1.6% contraction in Q1. Consequently, the external sector’s net contribution to overall economic growth swung from a 0.8 percentage-point detraction in Q4 to a 2.0 percentage-point contribution in Q1.

On the domestic front, growth in private consumption softened, rising a mild 0.1% in Q1 (Q4: +0.7% quarter-on-quarter). Government spending swung from a 0.3% increase in Q4 to a 0.8% contraction in Q1. In addition, fixed investment grew 0.5%, which was only a fraction of the 1.8% increase observed in Q4.

The State Secretariat for Economic Affairs (SECO) expects GDP to expand 2.2% in 2014. For 2015, SECO expects the economy to grow 2.7%. Meanwhile, the Swiss National Bank expects economic growth of around 2.0% in 2014. FocusEconomics Consensus Forecast panelists expect GDP to expand 2.1% in 2014, which is unchanged from last month’s projection. For 2015, the panel expects economic growth to accelerate slightly to 2.2%.

Author:Ricardo Aceves, Senior Economist

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